The fact that there were SMS games first didn't hurt it all. Even if it could've turned some people off, it never happened because less people knew (or know now) what the SMS was than the TG-16.
Ys I & II to this day is one of the main draws of the Turbo/PCE and I don't think that it would've hurt Phantasy Star II if it also included a majorly enhanced port of the original. R-Type and Dragon's Curse are also favorite Turbo games of most non-hardcore Turbo players and Dynastic Hero isn't lessened by the SMS port. The fact that it Ys I - III, Valis, Altered Beast, Wizardries, Operation Wolf, Fantasy Zone, Parodius, Salamander, Gradius, Twinbee, Legend of Valkyrie, etc were also on Famicom/NES doesn't make a difference either. Even the Bonk ports didn't hurt as far as actual content, since they all felt so broken and didn't look as nice. The notion that Bonk was on other platforms might've affected the Turbo brand, but probably not much more than there being Sonic games for SMS, Game Gear and NGP.
The SMS only lessened the impact of the Genesis for me, since I'd played most SMS games up till the Genesis launched and what I most wanted out of graphics (vibrant color and shading) was weaker in the early Genesis games, which looked pale and two-toned.
Most SMS games that were also on NES already looked like a step above. Having Turbo versions that were so much more advanced only added to the next generation feel.